Electricity suppliers tight-lipped on potential cuts to bills despite falling prices

Electricity suppliers remain tight-lipped on the prospect of cutting families’ bills despite likely further falls in wholesale prices.

Recent reports show that European natural gas stocks were at record levels last week, implying further falls in both the cost of the fuel and wholesale electricity prices, which have been retreating from their autumn and winter peaks.

However, leading Irish energy suppliers are not saying if they plan to cut household charges, which have trebled since 2021 to about 44 cent a kilowatt hour, the unit in which electricity is sold.

Bord Gáis Energy said any “downward fluctuation” in wholesale energy prices would not be reflected in customer prices for some time, as it buys electricity and gas 18 to 24 months in advance of selling it to households.

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“As confirmed in our financial results for the year 2022, we absorbed over €60 million in losses in our residential supply business,” the company said.

It has also put €3.6 million, 10 per cent of operating profit, into an energy support fund administered by four charities, including St Vincent de Paul and Focus Ireland.

ESB-owned Electric Ireland noted that it had not increased prices since October last year and had given €50 credit to each residential customer in December, at a cost of €55 million.

The company maintains that it offers the “lowest cost standard variable tariff” for households, even after calculating other suppliers’ reductions.

SSE Airtricity argued that wholesale prices still exceeded their pre-crisis levels and spiked at more than 1,000 per cent of this over the last year, demonstrating the role suppliers play in protecting families from volatility.

The company noted that it decided to forgo profits from its residential business and had offered €25 million in customer supports.

Irish energy suppliers began their first round of increases in 2021, shortly after wholesale rates began rising, partly driven by spikes in natural gas prices on world markets.

Credit agency Moody’s recently reported that the EU was expected to end March with record-high gas storage for the time of year. Its analysts calculated that 56 per cent of the EU’s total capacity was full, 23 billion cubic metres above its average level for the same period between 2016 and 2020.

Industry figures were also speculating that the EU could take in further shipments of liquefied natural gas (LNG) this week, which helped maintained stocks during the winter.

“European gas prices have fallen by 86 per cent from their peak in August 2022 to around €43 per megawatt hour in March 2023, but still remain around two to three times the long-term average,” the agency said.

Wind Energy Ireland reported on Wednesday that more than a third of Ireland’s power in March was generated by wind farms, with the renewable source powering 40 per cent of generation demand over the first three months of the year.

Moody’s believes that high gas stocks will help offset an expected decline in supplies from Russia over the coming year. However, even with further LNG supplies, Moody’s maintains that the EU still faces a shortfall in gas supplies as warmer than usual weather this winter helped ease demand.

It warned that gas and LNG prices would remain high and volatile over the next three years.

Natural gas prices determine electricity costs as the fuel is used to generate much of the power used in the EU while it acts as a back up to intermittent renewable supplies.